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If there's still an invoice & it's showing the cash discount then that's totally legit & fine for you - sometimes for businesses cashflow is more important than revenue.
If it's cash in hand & no invoice - you're both indulging in a bit of tax avoidance (whether the discount is enough for your risk profile is up to you). Realistically your risk (other than HMRC) is you've got no official support if there's an issue, though you can still communicate with them & threaten their reputation.
Lw.
Our drive guy has offered us -10% for cash. Parking (badumtish) the moral issues, does paying cash open you up for liability / put you at risk?